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Lakeway City Council proposed adopting a $0.1760 tax rate for fiscal year 2026-2027 at an Aug. 17 meeting, with Louis Mastrangelo and Kelly Brynteson opposing the maximum rate.
This amount reflects the de minimis rate previously recommended by city staff.
The background
Lakeway City Council discussed adopting the de minimis rate to contribute to eliminating the projected $1.6 million shortfall for fiscal year 2026-2027.
The de minimis rate is a special tax rate designed to give cities with a population of less than 30,000 flexibility. it allow eligible cities to adopt a tax rate that generates $500,000 more in property tax revenue than the previous year without triggering the voter-approval rate, according to the Texas Comptroller.
The voter approval rate would have been $0.1733 per $100 home valuation.
The de minimis rate is expected to increase property taxes by approximately $77 per year, or $6.42 per month, on the average home value in Lakeway, which is projected to be $857,615 next fiscal year, City Manager Joseph Molis said.
After adopting the de minimis tax rate, the city’s shortfall will be at $638,000.
Lakeway residents are currently paying $0.1696 per $100 of valuation in city property taxes.
The big picture
In order to further work towards eliminating the shortfall, Lakeway city staff have also identified an additional $500,000 in potential expenditure reductions across departments each year, from fiscal year 2026 through fiscal year 2028.
Some of the recommended reductions include $200,000 in position attrition in fiscal year 2028, technology cuts, reducing communications production costs, pausing the citizen’s police academy, and reducing training costs for committees and staff.
Other potential reductions may include eliminating annual holiday events and pool events in fiscal year 2029-30.
“We’re working on a five year plan... . Now we’re to the point where we need to start talking about impacts to services,” Molis said.
According to city documents, the objective of the cuts and proposed budget is not only to balance the fiscal year 2026-2027 budget for the city, but to establish a sustainable plan that reduces structural imbalances.
“At the end of the day, we all move to Lakeway for specific reasons, and I think the more we chip away at those reasons, the more we lessen the city,” Molis said. “I think that we owe it to our citizens to try to keep the status and the quality of service as high as we can ... I see the value of [increasing] taxes as a priority over cutting services.”
What’s next
Public hearings for the proposed tax rate will take place on Sept. 8 and Sept. 21.
